The petitioner,
Larry D. Chaney, filed a petition in the Workers' Compensation Court of
the State of Montana in which he sought benefits for disability which
he alleged was caused by an injury that occurred in the course and scope
of his employment with Owens-Hurst Lumber Company in 1983. United States
Fidelity & Guaranty, Owens-Hurst's insurer, denied all liability.
The State Compensation Insurance Fund, which had paid benefits to Chaney,
intervened and sought indemnification from USF&G. After a trial, the
Workers' Compensation Court entered an order and judgment in which it
denied Chaney's and the Fund's claims. Both Chaney and the Fund appeal
the order and judgment. We reverse the order and judgment of the Workers'
Compensation Court.

We restate the
issues on appeal as follows:

1. Did the Workers'
Compensation Court err when it concluded that Chaney was not entitled
to benefits?

2. Did the Workers'
Compensation Court err when it concluded that the State Fund was not
entitled to indemnification from USF&G?

3. Is Chaney
entitled to attorney fees and costs?

FACTUAL BACKGROUND

Petitioner Larry
Chaney suffers from carpal tunnel syndrome (CTS). He alleges that his
CTS, which required surgery in 1992, was caused by a November 3, 1983,
injury he suffered while working on the green chain at Owens-Hurst Lumber
Company which was insured at that time by United States Fidelity &
Guaranty (USF&G). Chaney alleges that while working on the green chain,
he slipped on ice, fell from the green chain platform, and broke his fall
with his forearms and wrists. He alleges that his injury was caused by
either that incident or the repetitive gripping and lifting activity involved
in his work.

On November 11,
1983, Chaney filed a claim for workers' compensation. The Employer's First
Report, which was signed by claimant, describes the accident as follows:

Arms and [h]ands
started to go to sleep and get num [sic] while working and after work.
Stacking 2 x 6's and Tye's [sic].

Chaney did not
specifically mention the fall in the First Report, but he did note the
date of the fall and testified that he reported the fall to Owens' office.
Chaney also listed his "arm, wrist, hand and fingers" as the
parts of the body affected. Chaney's treatment immediately after the alleged
injury in 1983 consisted of two visits to Dr. Forest F. Schroeder who
diagnosed Chaney's injury as "Myalgia and tendon/ligaments strains
secondary to archaic working conditions and long shifts". Chaney
continued to work for Owens after his injury until Owens laid him off
in late December 1983.

Scott Hall, a
claims supervisor with USF&G, testified that no payment was made by
USF&G to Chaney. When asked whether USF&G ever accepted the claim,
Hall replied, "I have no records at all. I see nothing to indicate
that it was accepted." When asked whether anything in his file indicated
that the claim was denied, Hall replied, "No, I do not."

In 1989 Chaney
again consulted a physician and complained of paresthesia of his thigh,
left hand, forearm, and right finger. That physician referred Chaney to
Dr. John Stephens who performed nerve conduction tests on Chaney. Dr.
Stephens interpreted those tests as suggestive of bilateral CTS.

On September 17,
1991, Chaney reported hand numbness to Dr. Michael Nolan who then referred
Chaney to a surgeon, Dr. Stuart Reynolds, who referred Chaney to Dr. Patrick
J. Cahill for nerve conduction studies. Dr. Cahill found that Chaney had
mild CTS and Dr. Reynolds then returned Chaney to Dr. Nolan's care. Chaney
did not complain about CTS symptoms again until September 1992. In October
1992, he returned to Dr. Reynolds who again asked Dr. Cahill to perform
nerve conduction studies. Dr. Cahill reported that the study showed evidence
of moderately severe CTS and suggested surgery, which Dr. Reynolds performed
in 1992.

Chaney quit his
work as a mechanic for Olson Ford on November 17, 1992, to have the CTS
surgery performed on his right wrist and has not worked since that time.
In December 1992, he had the surgery performed on his left wrist. Since
his surgery, the Fund, which insured Olson Ford, has paid Chaney temporary
total and medical benefits while reserving rights and defenses against
Chaney and USF&G.

On November 9,
1993, Chaney petitioned the Workers' Compensation Court for a determination
that USF&G is liable for temporary total, permanent total, permanent
partial, rehabilitation and medical benefits, as well as attorney fees,
and a penalty. The Fund intervened and sought indemnification for compensation
and medical benefits it has paid Chaney since 1993.

After a trial,
the Workers' Compensation Court concluded that Chaney was not entitled
to benefits from USF&G because his 1983 injury did not proximately
cause his permanent damage. The court based its conclusion on its findings
that Chaney suffered no acute injury due to a fall and that, in fact,
the fall did not occur; that he did not have consistent symptoms since
1983; that his accounts of his symptoms since 1983 were contradictory;
and that "[d]uring those years he engaged in provocative activities
at various times" and "[i]t appears likely that claimant's CTS
developed over a period of several years." The court also concluded
that the Fund was not entitled to indemnification from USF&G for the
benefits it paid to Chaney and that Chaney was not entitled to attorney
fees, costs or a penalty.

ISSUE 1

Did the
Workers' Compensation Court err when it concluded that Chaney was not
entitled to benefits?

In its order,
the Workers' Compensation Court found that "[l]acking any evidence
that the claim was timely denied, the Court finds that the claim was accepted
by USF&G." The court then concluded that Chaney was not entitled
to benefits from USF&G because his 1983 injury did not proximately
cause permanent damage. Therefore, the court, without finding a subsequent
intervening injury, concluded that USF&G's failure to deny Chaney's
claim within thirty days did not preclude it from denying liability for
Chaney's present disability. This conclusion is inconsistent with both
statutory and case law.

Section 39-71-606(1),
MCA (1983), provides:

Every insurer
... shall, within 30 days of receipt of a claim for compensation, either
accept or deny the claim, and if denied shall inform the claimant and
the department in writing of such denial.

An insurance carrier's
failure to comply with Sec. 39-71-606(1), MCA, and either accept or deny
a claim within thirty days constitutes an acceptance of the claim as a
matter of law. Haag v. Montana Schools Group Ins. Auth. (1995), 274 Mont.
109, 906 P.2d 693.

Here, in accordance
with our decision in Haag, the Workers' Compensation Court found that
USF&G accepted liability because it failed to timely accept or deny
the claim; however, the court then went on to find that no fall occurred
and that "[m]ore probably he [Chaney] experienced a gradual onset
of numbness in his hands, arms and shoulders due to the repetitive nature
of his work on the green chain." Finally, the court concluded that
Chaney's 1983 injury (which, based on the only medical evidence offered,
was consistent with CTS) did not cause his current CTS condition and need
for surgery and that he was not entitled to benefits from USF&G. Before
reaching its ultimate conclusion, the court found neither an intervening
accident nor a point of maximum healing. The court's jump from USF&G's
acceptance of liability, which is not contested by USF&G on appeal,
to the lack of causation and the ultimate denial of benefits to Chaney
is contrary to our decisions in Haag and Walker v. United Parcel Serv.
(1993), 865 P.2d 1113.

In Haag, where
we held that the failure to accept or deny a claim pursuant to statute
is deemed an acceptance of the claim, the employer contended that the
claimant did not sustain an injury caused by an accident as the statute
requires. Haag, 906 P.2d at 695. The insurer did not timely deny the claim,
but instead denied the claim more than two months after receiving it.
Haag, 906 P.2d at 696. The Workers' Compensation Court concluded that
the claimant was not injured in a work-related accident and, on that basis,
denied him benefits. Haag, 906 P.2d at 694. We reversed the court and
held that the insurer's failure to accept or deny the claim as required
by Sec. 39-71-606(1), MCA, is deemed an acceptance of the claim. Haag,
906 P.2d at 697. Because of the automatic acceptance of a claim, causation
issues were irrelevant.

Likewise in this
case, to qualify for benefits Chaney initially needed to prove by a preponderance
of the evidence that he sustained a compensable injury, Sec. 39-71-119,
MCA; Gerlach v. Champion Int'l (1992), 836 P.2d 35, 37, and that a causal
connection existed between his injury and his current condition. Brown
v. Ament (1988), 162-63, 752 P.2d 171, 174. Chaney showed that his original
injury was the same kind of injury to the same parts of his body for which
he now seeks benefits and that USF&G failed to either accept or deny
his claim within thirty days.Once a claimant shows a failure to timely
accept or deny the claim, his initial burden of proof is satisfied. See
generally Haag, 906 P.2d 693.

Because Chaney's
claim was accepted and his initial burden of proof satisfied, the burden
of proof shifted to USF&G to show that other injuries caused the extent
of his current condition. Walker v. United Parcel Serv. (1993), 865 P.2d
1113, 1117. To avoid further liability, USF&G was required to show
that Chaney had attained a condition of maximum healing and that Chaney
sustained an injury after he reached maximum healing. See Caekaert v.
State Comp. Mut. Ins. Fund (1994), 885 P.2d 495, 500-01; Lapp v. W.R.
Grace/Bomac Drilling (1992), 836 P.2d 602, 604; EBI/Orion Group v. State
Comp. Mut. Ins. Fund (1991), 452-53, 816 P.2d 1070, 1072; Belton v. Hartford
Accident & Indem. Co. (1983), 658 P.2d 405, 409-10. USF&G made
no effort to meet its burden.

At trial, USF&G
offered no evidence that claimant reached maximum healing following his
1983 injury or that he suffered any subsequent injury. USF&G presented
no competent medical evidence to suggest another cause for Chaney's CTS
other than the incident in 1983. Moreover, the Workers' Compensation Court
specifically found that no date for maximum healing could be established
and failed to find that any other injury caused Chaney's CTS. The court
did list under other injuries that claimant cut a tendon of his left hand,
suffered a back injury, cut his foot, and suffered a strain of his arm
and neck after 1983, but it did not find any causal connection between
any post-1983 injury and Chaney's current condition. Therefore, USF&G
has not met its burden pursuant to Walker v. United Parcel Serv.

For these reasons,
we conclude that USF&G accepted the claim when it failed to timely
deny it, and after accepting the claim, it failed to meet its burden to
prove maximum healing and an intervening event. Therefore, the Workers'
Compensation Court erred when it denied Chaney benefits from USF&G
and concluded that his 1983 injury did not proximately cause his current
condition.

ISSUE 2

Did the
Workers' Compensation Court err when it concluded that the State Fund
was not entitled to indemnification from USF&G?

We have recognized
a workers' compensation insurer's right to recover benefits that should
have been paid by another carrier. For example, in EBI/Orion Group v.
State Comp. Ins. Fund (1989), 782 P.2d 1276, 1279, we stated that "[t]he
right of indemnity is that where one is compelled to pay money which,
in justice, another ought to pay, the former may receive from the latter
the sum so paid." We have also stated:

If it is later
determined that the insurance company on risk at the time of the accident
should not pay the benefits, this insurance company, of course, has
a right to seek indemnity from the insurance company responsible for
the benefits already paid out to the claimant.

The Fund is a
subsequent workers' compensation insurer. It insured Olson Ford at the
time Chaney filed his 1992 claim and has paid Chaney temporary total benefits
as well as medical benefits pertaining to Chaney's wrist and hand problems.
As discussed above, we have held that to shift responsibility to a subsequent
insurer, a prior insurer must show that the claimant suffered an injury
during subsequent employment after he or she reached maximum healing from
the initial injury. O'Brien v. Central Feeds (1990), 786 P.2d 1169, 1172;
Belton, 202 Mont. at 392, 658 P.2d at 409-10. USF&G failed to present
evidence that Chaney suffered an injury during subsequent employment after
he reached maximum healing from the 1983 injury. Therefore, we conclude
that the Fund is entitled to indemnification from USF&G for all compensation
and medical benefits paid to Chaney by the Fund.

ISSUE 3

Is Chaney
entitled to attorney fees and costs?

Chaney contends
that he is entitled to reasonable attorney fees and costs pursuant to
Sec. 39-71-611, MCA (1983), which provides:

In the event
an insurer denies liability for a claim for compensation ... and the
claim is later adjudged compensable by the workers' compensation judge
or on appeal, the insurer shall pay reasonable costs and attorneys'
fees as established by the workers' compensation judge.

In this case,
Owens' insurer, USF&G, denied liability for benefits which have now
been adjudged compensable. Therefore, we conclude that Chaney is entitled
to attorney fees and costs and we remand to the Workers' Compensation
Court for a determination of reasonable attorney fees and costs.

For these reasons,
we reverse the order and judgment of the Workers' Compensation Court.